More on Counterfeit Medicines & Safety

My last post contained some perspectives about fake medicines. That same day, the LA times ran an article about California’s long-delayed pedigree requirements for tracking prescription medicines. This law was prompted by the discovery of fake medicines for HIV/AIDS in 2000, and was intended to achieve what the FDA has been trying to implement for many years.

The LA Times article blames the delays in the state’s drug tracking system on the industry – from the manufacturer to the retail pharmacy. I suspect that the real challenge is not in the technical or cost aspects from the manufacturers – who certainly have lots to gain by stopping counterfeits of their products from being sold instead of the real thing, but from the wholesalers and to a lesser extent the pharmacies.

I’m assuming that wholesalers don’t knowingly sell counterfeit medicines, but under the current system, they can potentially make a lot of money doing so – particularly when buying them allows for a larger mark-up to the pharmacies than the real medicine. This is part of the economic reality of wholesalers, who in effect are arbitraging the differential costs of pharmaceuticals as a commodity by buying someone else’s excess supply and delivering it where it is needed. Now normally this would be market forces working to efficiently delivery medicines to where they were needed. However, without adequate pedigrees (i.e. paper or electronic documentation demonstrating the entire chain of custody of the medicines from the time it left the manufacturer), there is a great economic incentive for counterfeiters to push their fake medicines into this supply chain and make a huge profit.

Of course, the pedigree system needs to be sophisticated enough that it too can’t be forged – otherwise it is worthless. This is why retail pharmacies may be balking at the cost of implementing a system where they aren’t going to benefit, and don’t believe they are part of the problem. In general, pharmacies, don’t have great incentive for selling fake medicines – they would get paid the same dispensing and product fees whether the product was real of fake. The only case where pharmacies would increase their profits is if they were to be able to buy the fake medicines for less, but this would probably only occur for large chain pharmacies where they are essentially acting as their own wholesalers and wouldn’t be the case for the independent pharmacies – the few that are left.

Because pharmaceutical companies have incentive to track shipments of their medicines and make sure they aren’t stolen, some are starting to use RFID technology. This is surely a big investment that is worth the cost. Implementing a secure pedigree tracking system might be more costly, but would certainly be a worthwhile expense to ensure the safety and quality of medical care.

In general health policy people in the US don’t like to talk about counterfeit medicines because it raises the potential that people won’t trust their medical systems or their medicines. That attitude would be OK if there was nothing to be done about it, but since there is a solution, I think it should be talked about. The other challenge to pushing for drug tracking systems is that as health reform initiatives go, it’s not as “sexy” as electronic medical records, checklists, “evidence based medicine” or eliminating fraud and abuse and using the savings to expand insurance coverage to the uninsured. But it is a doable improvement. The challenge is figuring out how to pay for it, and convincing all the stakeholders effected to work together to make it happen.

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